Sale (movable goods)
A sale is a contract by which goods are transfered from one person to another in exchange for money - a goods for goods exchange is called a barter.. For movable property, this is generally governed by the Sale of Goods Act 1979 which defines goods as "All corporal movables except money". The status of incoporeals, like software, is unclear. Types of contracts Sale of goods contracts can be created orally, in writing, or through activity (such as pointing at an item, or handing it to a sales clerk). Both parties must have capacity to sell, and the seller must have the right to sell the goods (with some exceptions). There are important distinctions between Consumer sales, and sales outwith the course of a business. Sales in the course of a business getadditional quality safeguards that a sale between private persons would not attract. Goods can be sold on a conditional, or unconditional basis, or on a contingency basis (such as the sale of a future crop). Whether goods are "Specific" at the time of the agreement will also affect when property is to pass; specific goods as the name suggests are specific to the item (that painting), whereas ascertained are usually generic goods that need separation (a ton of rice from storage). Duties in the contract The duties in a sale transaction are for the most part obvious, The seller must deliver goods and supply good and marketable title, and the buyer must pay for them (Sale of Goods Act 27(1). Unless otherwise agreed this transfer of ownership is simeltanious (s 28). There should be an opportunity for the buyer to inspect the goods the goods. Delivery is owed by the seller at the right place, at the right time, and with the right quality. Where the sale is by description, the goods must meet the description - requirements are not relevant (Ashington Piggeries v Christopher Hill - although note that this case lost on this ground but was won on the quality ground above), Border Harversers v Edwards Engineering (perth) Ltd 1985). The description however can vary depend on what both the buyer and seller know about the product. in Harlington & Lenister Enterprise v Christpher Hull fine art, as neither the seller did not know the image he was selling was a forgery, the focus of the sale contract was the image, and not the painter. If delivery has failed, damages can be claimed for the difference in the market price between when the price was paid, and the market price when breached. Consumer customers can also seek reduction of the contract. Good and Marketable title can mean that even when an item is indisputably owned by the seller, the goods cannot still transfer, in Niblett v Confectioners Materials Co Ltd, the sale of Condensed milk by an american company to a UK company was prevented by customs seizing the goods due to a trademark dispute. As the goods could not be used or sold by the buyer, the seller was unable to provide "good" title and thus was in breach of contract. Contract Essentials Price The price to be paid for the goods must be either specifically given, or for a 3rd party to fix. In May & Butcher v The King (1934) "Price to be agreed" was not held to be specific enough, as the price was not ascertainable the contract failed for having this essential element missing. Fixing by a 3rd party was confirmed in Foley v Classique Coaches, where an arbitration clause allowed a 3rd party to se the price - if a 3rd party cannot or will not set the price the contract is avoided. Where a price is not determined at all (not where there is a dissensus about the price, Section 8 of the sales of goods act can step in to determine a price. Quality There is no implied quality in terms, except as is given in Section 14 and 15 of the Sale of Goods act. The legislation does imply that goods sold will be of a "Satisfactory quality" (previously a "merchantable quality") when sold in the course of a business. The term "Course of a business" is quite broad, and includes sales by a business that are not normal transactions for the business (such as selling equipment previously used by the business). 14(3) gives as one of these as the purpose given for the item being purchased In Ashington Piggeries v Christopher Hill) the case the clamaint was sold "Herring meal of average quality" which was toxic for the mink it was being sold to feed. The sellers knew this was the purpose of the sale, and thus it did not meet the quality requirement. This quality requirement must be communicated - where a seller is unaware of a requirement (such as for the flat installed in to meet a certain energy rating when selling boilers in Jewson v Boyham) then the seller is not laible. if the goods have not been accepted then they can be rejected for not meeting the standard. Acceptance can be explicit, or implicit in taking any action that is inconsistent with the ownership of the seller. it is also automatic after a reasonable period (Truck UUK v Tokmaidis). Where goods are sold by sample, the bulk must conform to the quality of the supplied standard. The standards required depend on the item, and the price paid (S 14(2A)). A new vehicle (as in Rogers v Parish) would be expected to be clear of scratches and blemishes, but a second hand vehicle not. A buyer of a luxury vehicle (Bernstien v Pamson motors) would epect to be less tolerant of blemishes than a non luxury car buyer. Minor defects, if the retailer/manufacturer will repair them do not generally detract from an item being of satisfactory quality, in the Pamson motors case leaks from the gearbox in a new vehicle were to be expected, and could be resolved with a minor repair. The Quality also includes the instructions that game with them, if the instructions are wrong or misleading, they may make a good of unsatisfactory quality, this was the case in Wormell v RHM Agricultral (east) where an herbicide that had become ineffective despite use within the provided instructions was held to be of unsatisfactory quality. Delivering to a third party (Hammer & Barrow v Coca Cola) and seeking further information on goods (Clegg v Anderson) is not acceptance. An item of unsatisfactory condition can still be rejected, post repair, if the seller cannot explain what was wrong with the device (J&H Richie v Lloyd). If the contract has already been accepted, the goods cannot be rejected, but the buyer can claim damages (Douglas v Glenvarigill). If the buyer has their attention drawn to an element of quality, or has a full examination that should reveal any defects, then under 14C of the SOGA there is no liability for the defect. Right Time If time is of the essence in a contract, a delayed delivery can lead to the contract being terminated. In general any agreement giving a fixed delivery period or promise before a specific date will bring this. However insisting upon delivery post this will prevent reduction of the contract, although a new delivery date can be set by the buyer where the scenario will play out again. Where no time is given, the courts require it to be delivered within a reasonable time, but this will depend on the circumstances. Transfer In order for property to transfer, the seller should have the right to sell the goods (either as the owner, or their agent). All parties should be aware of this status. Section 24/25 allows for ownership to potentially pass if the seller doesnt have the right to sell, but the buyer is in good faith. Under Section 24, if a seller remains in possession of goods after a sale, and sells them to a good faith third party, then the third party will gain good title. Section 25 allows a similar case where a buyer buys an item with a "retention of title" clause from the seller, a good faith third party buyer buying from the original buyer will also gain good title. The ownership of the property, and generally risk transferes when the parties "intend" it to transfer (S17 SOGA), in any dispute the conduct of the parties will be used to determine when this is; Section 18 has some assumptions as to when ownership passes if not stated specifically in the contract, but in general ownership passes when the goods are deliverable - if they are already deliverable then transfer is immediate even if not delivered immediately. For Bulk goods, a share in the whole transfers immediately. If unpaid, the goods can be kept by the seller through a lien. Where there is a delay in delivery, risk lies with the party at fault for the delay (S20 (1) SOGA), and any damage that would not have occured for that party's fault is also liable for damage to the property. The party with custody must however be a good custodian (s20 (3) SOGA) and will be liable for any loss there caused. These rules do not apply in a consumer contract, risk always lies with the seller until delivery. This is a departure from normal scots common law - normally ownership transfers at delivery for a gift, or barter. Take for example a potato crop, sold on contingency with the conditions that it be harvested, and delivered to a harbour for onward transportation. The property would not pass until it is in a deliverable state, so whilst in the ground the potatoes are absolutely still the property of the seller, not the buyer. In Cockburn's Trusties v Bowie & sons it was determined that they were not in a deliverable state until taken to the harbour. If the goods are completely generic, and are a part of a larger bulk (Say 100 out of 500 tons of coal) ownership of the 100 cannot pass until seperated, however a proportional share (1/5) of the whole can pass. However it must be paid for in advance and the bulk itself has to be identified. (S20A 20B). IF specific goods have perished, then the contract is void (or avoided if not yet complete and perished without fault). Remedies Seller Action for Price (s49 SOGA) Under s49(1)This requires the buyer has had the property pass to them, but wrongfully neglects or refuses to pay for the item. Section 49(2) also allows this to be also claimed if payment date has paid, even if delivery has not passed. Damages (s50 SOGA) If a buyer refuses to accept the goods, the seller can seek damages. If the goods can be sold, the damages are available are those of the difference between selling price and market price when they should have been delivered, even if the price later increases. Possessory Remedy (Lien) If the goods are not yet paid for and the seller is still in possession of the goods, then the seller can retain possession of the goods. This right continues even if the goods have been partially delivered, although obviously only on the undelivered portion - the delivered portion cannot be reclaimed (London Scottish Transport v Tyres (Scotland) Ltd tried. If the goods are in transit, even if "delivery" has passed, the seller can stop to the goods in transit and recover them, but only if the buyer is insolvent. If the buyer receives the goods, even if ahead of scheduled, then this right ends. If the carrier receives an instruction to stop the transit, the carrier is liable if the transit is completed. Section 48 allows the seller to resell the goods, and for the buyer to gain good title. Buyer Rejection of goods If the seller has not accepted the goods, they can reject the goods. The buyer must have a reasonable opportunity to inspect the goods (unless agreed otherwise). If a "reasonable time" passes without intimation otherwise the buyer is deemed to inspect them. If the seller is in breach of one of the material terms of the contract, the seller can reject the goods and repudiate the contract (SOGA 15(1)(b)). This includes a material shortfall, and oversupply can reject the higher part, and there isn't a requirement to return the goods. All all breaches are material breaches in a consumer contract, this allows a consumer to reject goods and repudiate the contract for any breach. Consumers also have the right to have repaired, replaced, or reduction of the purchase price. If repair is impossible or unfeasable or if this isn't completed, the buyer may rescind their contract (s48A-48C SOGA). Damages For non material breaches to non consumers, the only remedy left is damages, although can also be claimed in the event of a material breach. the prima facie damages are the differences in market value between the point of sale and the date of the breach, or for defective goods the value they would have had if they had conformed to the contract and the value at delivery. Consequential loss is dealt with as per negligence. Specific Implement If the seller has failed to deliver, the buyer can require the seller to deliver. Category:Commercial law